International Journal of Business and Management Invention (IJBMI) is an international journal intended for professionals and researchers in all fields of Business and Management. IJBMI publishes research articles and reviews within the whole field Business and Management, new teaching methods, assessment, validation and the impact of new technologies and it will continue to provide information on the latest trends and developments in this ever-expanding subject. The publications of papers are selected through double peer reviewed to ensure originality, relevance, and readability. The articles published in our journal can be accessed online.
This document discusses organizational citizenship behavior (OCB), which refers to individual behaviors in a workplace that are beneficial but not formally rewarded. The authors aim to analyze how OCB impacts various organizational performance measures based on its antecedents and consequences. OCB is described as having two dimensions - behaviors directed at individuals, and behaviors that benefit the overall organization. Various antecedents of OCB are identified, like role clarity, leadership, commitment, and justice. These antecedents are then correlated with five organizational performance outcomes: reduced turnover and absenteeism, employee satisfaction and loyalty, and customer satisfaction and loyalty. The authors argue more research is needed on how demographics like age, gender and experience influence OCB.
Gender diversity on corporate boards a case of indiaIAEME Publication
The document summarizes a study examining gender diversity on the boards of 185 companies listed on India's BSE500 index over six years. Some key findings include:
- On average, 40% of companies had at least one woman on their board, but women accounted for only 5% of total directorships on average.
- The study estimated a 30% increase in women on boards in the next five years and a 61% increase over ten years based on current trends.
- Women held few board or committee chair/membership positions, suggesting they may be token representatives without real influence.
This document summarizes a research article that examines the relationships between organizational citizenship behaviors, job embeddedness, organizational identification, job performance, and voluntary turnover intention in Korean employees. The study found that aspects of job embeddedness like fit within the organization, links to the organization, and sacrifices associated with leaving had negative effects on voluntary turnover intention but positive effects on job performance and organizational identification. It also found that organizational citizenship behavior mediated the relationships between job embeddedness and the other factors.
Corporate culture and organizational effectivenessAlexander Decker
This document summarizes a study that examined the effect of corporate culture on organizational effectiveness in the Nigerian banking industry. The study surveyed 388 managers from 24 Nigerian banks. It found that adaptability positively influences profitability and market share, but not productivity. Shared mission, employee involvement, and shared values were positively related to profitability, productivity, and market share. The study concluded that corporate culture significantly influences organizational effectiveness. It recommends that in addition to adaptability, organizations should minimize costs and waste and share their mission and values with employees to promote effectiveness.
This document summarizes a research paper that explores the link between organizational commitment and organizational citizenship behavior among expatriates in Taiwan. It begins with an abstract that describes the study's objectives, methods, and key findings. The full paper then provides definitions and literature reviews of organizational commitment and organizational citizenship behavior. It discusses previous research that has found relationships between aspects of organizational commitment, like affective commitment, and dimensions of organizational citizenship behavior, like courtesy. The study aims to better understand the attitudes and behaviors of expatriates in Taiwan by exploring correlations between sub-dimensions of the two constructs.
This document discusses organizational citizenship behavior (OCB), which refers to individual behaviors in a workplace that are beneficial but not formally rewarded. The authors aim to analyze how OCB impacts various organizational performance measures based on its antecedents and consequences. OCB is described as having two dimensions - behaviors directed at individuals, and behaviors that benefit the overall organization. Various antecedents of OCB are identified, like role clarity, leadership, commitment, and justice. These antecedents are then correlated with five organizational performance outcomes: reduced turnover and absenteeism, employee satisfaction and loyalty, and customer satisfaction and loyalty. The authors argue more research is needed on how demographics like age, gender and experience influence OCB.
Gender diversity on corporate boards a case of indiaIAEME Publication
The document summarizes a study examining gender diversity on the boards of 185 companies listed on India's BSE500 index over six years. Some key findings include:
- On average, 40% of companies had at least one woman on their board, but women accounted for only 5% of total directorships on average.
- The study estimated a 30% increase in women on boards in the next five years and a 61% increase over ten years based on current trends.
- Women held few board or committee chair/membership positions, suggesting they may be token representatives without real influence.
This document summarizes a research article that examines the relationships between organizational citizenship behaviors, job embeddedness, organizational identification, job performance, and voluntary turnover intention in Korean employees. The study found that aspects of job embeddedness like fit within the organization, links to the organization, and sacrifices associated with leaving had negative effects on voluntary turnover intention but positive effects on job performance and organizational identification. It also found that organizational citizenship behavior mediated the relationships between job embeddedness and the other factors.
Corporate culture and organizational effectivenessAlexander Decker
This document summarizes a study that examined the effect of corporate culture on organizational effectiveness in the Nigerian banking industry. The study surveyed 388 managers from 24 Nigerian banks. It found that adaptability positively influences profitability and market share, but not productivity. Shared mission, employee involvement, and shared values were positively related to profitability, productivity, and market share. The study concluded that corporate culture significantly influences organizational effectiveness. It recommends that in addition to adaptability, organizations should minimize costs and waste and share their mission and values with employees to promote effectiveness.
This document summarizes a research paper that explores the link between organizational commitment and organizational citizenship behavior among expatriates in Taiwan. It begins with an abstract that describes the study's objectives, methods, and key findings. The full paper then provides definitions and literature reviews of organizational commitment and organizational citizenship behavior. It discusses previous research that has found relationships between aspects of organizational commitment, like affective commitment, and dimensions of organizational citizenship behavior, like courtesy. The study aims to better understand the attitudes and behaviors of expatriates in Taiwan by exploring correlations between sub-dimensions of the two constructs.
Does board gender diversity reduce ceo lucksadafnoor10
This document examines whether board gender diversity reduces opportunistic timing of CEO stock option grants, known as "CEO luck". The study analyzes companies in Australia and other countries. The results show that board gender diversity significantly decreases CEO luck, with its effect being 17.19% stronger than board independence. Instrumental variable analysis and propensity score matching support the finding that board gender diversity mitigates CEO luck. Board gender diversity may improve monitoring quality and corporate governance control compared to boards with only male directors.
Bashar H. Malkawi, Editorial Note: New horizons in Corporate Governance ResearchBashar H. Malkawi
Effective corporate governance covers wide array of issues ranging from separation of the CEO and chair of the board to the orientation for new directors. The articles published in this issue contribute to the existing literature in the field.
A study of the existence of glass ceiling in the telecommunication sector of ...iosrjce
IOSR Journal of Business and Management (IOSR-JBM) is a double blind peer reviewed International Journal that provides rapid publication (within a month) of articles in all areas of business and managemant and its applications. The journal welcomes publications of high quality papers on theoretical developments and practical applications inbusiness and management. Original research papers, state-of-the-art reviews, and high quality technical notes are invited for publications.
This study examined the relationship between employee commitment and organizational citizenship behavior in Nepalese companies. A survey was administered to 340 employees across five companies. The results showed that affective commitment and normative commitment were positively related to both factors of organizational citizenship behavior - altruism and compliance. Continuance commitment was not significantly related to altruism or compliance. The findings imply that affectively and normatively committed employees are more likely to exhibit organizational citizenship behaviors that benefit coworkers and the organization, while continuance commitment does not influence such extra-role behaviors. Overall, the study found employee commitment, especially affective and normative commitment, can promote organizational citizenship behavior in Nepalese workplaces.
This document summarizes a study that examined the relationship between job satisfaction (intrinsic and extrinsic) and organizational citizenship behavior (OCBI and OCBO) among employees at higher learning institutions in Malaysia. The study reviewed literature on OCB and job satisfaction, and developed hypotheses that intrinsic and extrinsic job satisfaction would both positively correlate with OCBI and OCBO. Surveys of employees were conducted to measure the variables and analyze their relationships. The findings and implications for understanding how job satisfaction impacts extra-role behaviors in educational organizations were then discussed.
International Journal of Business and Management Invention (IJBMI) is an international journal intended for professionals and researchers in all fields of Business and Management. IJBMI publishes research articles and reviews within the whole field Business and Management, new teaching methods, assessment, validation and the impact of new technologies and it will continue to provide information on the latest trends and developments in this ever-expanding subject. The publications of papers are selected through double peer reviewed to ensure originality, relevance, and readability. The articles published in our journal can be accessed online.
The document summarizes a study examining the relationship between job performance factors and career satisfaction of teachers in Malaysia. Specifically, it investigates the moderating roles of distributive justice, procedural justice, and interactional justice in the relationship between task performance, organizational citizenship behavior, and career satisfaction. The study found that task performance was positively related to career satisfaction. It also found that all dimensions of organizational justice predicted career satisfaction. Additionally, there was a significant interaction between teachers' ratings of organizational citizenship behavior and distributive justice in relation to career satisfaction.
This document discusses how the initial experiences of founding teams and early functional structures of organizations can influence their long-term evolution. It contrasts life-cycle views, where firms are expected to professionalize and adapt over time, with path-dependent views, where early conditions constrain later outcomes. The study examines how a founding team's prior functional experiences relate to initial functional structures, and how these initial conditions shape later top management teams and structures. It hypothesizes that founding experiences will influence initial structures, initial structures will determine later structures, initial structures will impact later hiring experiences, and founding experiences will affect later hiring experiences. Initial conditions are also hypothesized to impact organizational outcomes like speed of going public or obtaining venture capital. The document aims to extend
Lean production in Italian and US auto plants.
Several studies have acknowledged that lean production is implemented in diverse ways across workplaces, thereby generating different outcomes for workers. However, explanations for this variability needs further development. The present article addresses this issue by considering the role played by workplace unions' framing of lean production. It finds that unions' framing is derived from their identities in interaction with available resources in institutional and organisational terms. A case study comparison of the automotive parts industry in Italy and the United States was conducted.
The Effect of Organizational Commitment and Organization Identity Strength to...IOSR Journals
Fire Department Employee Performance Jakarta Indonesia was marked by people had not been
maximized yet since in the fire cases always come late. Society always expected the performance of the fire
department in carrying out their duties on time. The purpose of this research was to measure and describe the
extent to which performance of the Jakarta Fire Department when it was affected by the variable of
organizational commitment and strength of organizational identity and organizational citizenship behaviour.
The method used in this research was quantitative. Data analysis techniques used was SEM (Structural
Equation Modelling) with the help of AMOS program. The data were collected by using a research instrument
that was distributed to the sample of 355 employees. The results showed that organizational commitment was
significantly influence organizational citizenship behaviour, but having no significant effect on employee
performance. While organizational citizenship behaviour had a significant effect on employee performance.
Organizational citizenship behaviour was mediating the relationship between commitments to employee
performance. On the other hand, it did not significantly influence organizational identity on organizational
citizenship behaviour, and also no significant effect on the employee performance. The implication of research
was organizational citizenship behaviour of Fire Department employee to be important in improving employee
performance.
A framework for developing leadership model based on national culture aspectsAlexander Decker
This document proposes a framework to help multinational companies develop culturally appropriate leadership models for their subsidiaries operating in different countries. The framework involves identifying the cultural aspects that impact the workplace in the host country, the leadership practices associated with the host country's culture, and other contextual factors. Companies would use this framework to understand how the host country's culture shapes effective leadership and to develop models that fit each local context. The document recommends using case study and action research methods to implement the framework and build customized leadership models.
Organizational commitment profiles and job satisfaction among Greek private a...Yannis Markovits
This article examines the relationship between organizational commitment profiles and job satisfaction among Greek private and public sector employees. It summarizes previous research showing that organizational commitment consists of multiple components (affective, continuance, normative) that can form distinct profiles. Greece has unique cultural characteristics but has been underrepresented in organizational research. The study explores how commitment profiles relate to intrinsic and extrinsic job satisfaction in Greece, adding to the limited research on profiles outside North America. It also compares profiles and job satisfaction between private and public sector employees, who may differ due to Greece's employment context. The results could help validate the profiles approach across cultures and employment sectors.
The main objective of the current study is to investigate the effects of organizational culture on organizational health. Modern organizations are in a very intense competitive conditions and in order to survive, they need parameters which guarantee their survival. Therefore, the current study will investigate the significance of culture in this regard. Municipalities as one of the organizations providing urban services are in a position where it is possible to lose their impact due to the activities of other organizations. Accordingly, the statistical population selected for this study includes all the employees in Tehran Municipality. In order to gather the required data, after determining the sample size as 384 participants using Krejcie and Morgan table, standard questionnaire of Denison for culture (2000) and organizational health (2008) were used. The current study is a quantitative one carried out as a descriptive survey. The validity and reliability of the study are confirmed using appropriate methods. Finally, in order to test the hypotheses of the study, various descriptive and inferential statistical tests were used. It was found out that the organizational survival of Municipality was affected by various cultural parameters, among which compatibility had the highest impact.
Board of directors is the decision-making organ in the organization that faces complex tasks
pertaining to strategic-issue processing. It comprises of directors from various backgrounds
hence face interaction difficulties that can prevent them from fulfilling their tasks. This study,
will investigate whether the board diversity influences CSR and firm reputation in Kenya. This
will capture the boards’ monitoring and resource provision abilities; and it will be in line with
Agency and resource dependency theories. The general objective to the study is to establish
whether board diversity influences firm’s CSR and corporate reputation in Kenya. There have
been studies on how board diversity on firm performance and CSR but no paper has been
published looking at the corporate reputation and more over concerning gender diversity on
boards in developing countries.The number of women in the board has a significant impact on
corporate social responsibility and corporate reputation. Women bring a number of strengths to
the board including an increased sensitivity to CSR and participative decision-making styles
and these benefits contribute to enhanced corporate responsibility strength ratings.This study
makes a theoretical contribution to the corporate governance literature by analysing board
diversity within the framework of two major theories Agency and Resource. This study also
makes a theoretical contribution to the diversity and governance literature by providing a better
understanding of the relationships between board gender, professional and experience diversity
andfirm’s CSR and reputation.This study will be beneficial to the management of corporations
and top management in decision making especially on the issue of SCR and the firm’s
reputation. It will also lay ground for more studies to be conducted in Kenya and other
developing nations.
International Journal of Business and Management Invention (IJBMI)inventionjournals
International Journal of Business and Management Invention (IJBMI) is an international journal intended for professionals and researchers in all fields of Business and Management. IJBMI publishes research articles and reviews within the whole field Business and Management, new teaching methods, assessment, validation and the impact of new technologies and it will continue to provide information on the latest trends and developments in this ever-expanding subject. The publications of papers are selected through double peer reviewed to ensure originality, relevance, and readability. The articles published in our journal can be accessed online.
The Journal will bring together leading researchers, engineers and scientists in the domain of interest from around the world. Topics of interest for submission include, but are not limited to
Effects of managing gender of employees in enhancing organizational performan...Alexander Decker
This document summarizes a research study on the effects of managing gender diversity to enhance organizational performance at Kenya Ports Authority. The study found that gender, age and marital status impact organization performance and success. It recommends that KPA recruit a more diverse workforce to improve decision making, understand customer needs better, and increase staffing flexibility. Managing diversity well through human resource policies and practices can reinforce these benefits. The background discusses how globalization requires more interaction among diverse people, so organizations must capitalize on diversity. Gender diversity can provide resources like market insight and innovation that lead to competitive advantage and higher performance, according to previous research.
International Journal of Business and Management Invention (IJBMI)inventionjournals
International Journal of Business and Management Invention (IJBMI) is an international journal intended for professionals and researchers in all fields of Business and Management. IJBMI publishes research articles and reviews within the whole field Business and Management, new teaching methods, assessment, validation and the impact of new technologies and it will continue to provide information on the latest trends and developments in this ever-expanding subject. The publications of papers are selected through double peer reviewed to ensure originality, relevance, and readability. The articles published in our journal can be accessed online.
The moderating role of organizational tenure on the relationship between orga...Alexander Decker
This document discusses a study that examined the relationship between organizational culture and organizational citizenship behavior (OCB) in Ghana's banking industry, and whether that relationship is moderated by employee organizational tenure. The study found that organizational culture positively predicts OCB. Additionally, organizational tenure moderates the relationship such that employees with longer tenure are more likely to engage in OCB than those with shorter tenure. The findings are consistent with attraction-selection-attrition and human capital theories. The implications for practice and research are discussed.
- The study examined the effects of coworker trust, transformational leadership, job stress, and employee silence on organizational cynicism during the COVID-19 pandemic.
- The study found that coworker trust and transformational leadership negatively impacted organizational cynicism, while job stress positively impacted organizational cynicism.
- Employee silence was found to strengthen the positive effect of job stress on organizational cynicism.
Management of Cultural Diversity: new master in the Netherlands! More information: www.tilburguniversity.edu/education/masters-programmes/management-of-cultural-diversity
This document provides an overview of the Cross Cultural & Diversity Management course at Fore School of Management. The course aims to enhance knowledge of cross-cultural issues and sensitivity working in culturally diverse situations. Key topics covered include culture and its dimensions, cultural diversity priorities, Hofstede's cultural dimensions model, ethics and social responsibility, and managing across cultures. Evaluation includes assignments, projects, discussions, and assessments. Ground rules are also outlined.
Does board gender diversity reduce ceo lucksadafnoor10
This document examines whether board gender diversity reduces opportunistic timing of CEO stock option grants, known as "CEO luck". The study analyzes companies in Australia and other countries. The results show that board gender diversity significantly decreases CEO luck, with its effect being 17.19% stronger than board independence. Instrumental variable analysis and propensity score matching support the finding that board gender diversity mitigates CEO luck. Board gender diversity may improve monitoring quality and corporate governance control compared to boards with only male directors.
Bashar H. Malkawi, Editorial Note: New horizons in Corporate Governance ResearchBashar H. Malkawi
Effective corporate governance covers wide array of issues ranging from separation of the CEO and chair of the board to the orientation for new directors. The articles published in this issue contribute to the existing literature in the field.
A study of the existence of glass ceiling in the telecommunication sector of ...iosrjce
IOSR Journal of Business and Management (IOSR-JBM) is a double blind peer reviewed International Journal that provides rapid publication (within a month) of articles in all areas of business and managemant and its applications. The journal welcomes publications of high quality papers on theoretical developments and practical applications inbusiness and management. Original research papers, state-of-the-art reviews, and high quality technical notes are invited for publications.
This study examined the relationship between employee commitment and organizational citizenship behavior in Nepalese companies. A survey was administered to 340 employees across five companies. The results showed that affective commitment and normative commitment were positively related to both factors of organizational citizenship behavior - altruism and compliance. Continuance commitment was not significantly related to altruism or compliance. The findings imply that affectively and normatively committed employees are more likely to exhibit organizational citizenship behaviors that benefit coworkers and the organization, while continuance commitment does not influence such extra-role behaviors. Overall, the study found employee commitment, especially affective and normative commitment, can promote organizational citizenship behavior in Nepalese workplaces.
This document summarizes a study that examined the relationship between job satisfaction (intrinsic and extrinsic) and organizational citizenship behavior (OCBI and OCBO) among employees at higher learning institutions in Malaysia. The study reviewed literature on OCB and job satisfaction, and developed hypotheses that intrinsic and extrinsic job satisfaction would both positively correlate with OCBI and OCBO. Surveys of employees were conducted to measure the variables and analyze their relationships. The findings and implications for understanding how job satisfaction impacts extra-role behaviors in educational organizations were then discussed.
International Journal of Business and Management Invention (IJBMI) is an international journal intended for professionals and researchers in all fields of Business and Management. IJBMI publishes research articles and reviews within the whole field Business and Management, new teaching methods, assessment, validation and the impact of new technologies and it will continue to provide information on the latest trends and developments in this ever-expanding subject. The publications of papers are selected through double peer reviewed to ensure originality, relevance, and readability. The articles published in our journal can be accessed online.
The document summarizes a study examining the relationship between job performance factors and career satisfaction of teachers in Malaysia. Specifically, it investigates the moderating roles of distributive justice, procedural justice, and interactional justice in the relationship between task performance, organizational citizenship behavior, and career satisfaction. The study found that task performance was positively related to career satisfaction. It also found that all dimensions of organizational justice predicted career satisfaction. Additionally, there was a significant interaction between teachers' ratings of organizational citizenship behavior and distributive justice in relation to career satisfaction.
This document discusses how the initial experiences of founding teams and early functional structures of organizations can influence their long-term evolution. It contrasts life-cycle views, where firms are expected to professionalize and adapt over time, with path-dependent views, where early conditions constrain later outcomes. The study examines how a founding team's prior functional experiences relate to initial functional structures, and how these initial conditions shape later top management teams and structures. It hypothesizes that founding experiences will influence initial structures, initial structures will determine later structures, initial structures will impact later hiring experiences, and founding experiences will affect later hiring experiences. Initial conditions are also hypothesized to impact organizational outcomes like speed of going public or obtaining venture capital. The document aims to extend
Lean production in Italian and US auto plants.
Several studies have acknowledged that lean production is implemented in diverse ways across workplaces, thereby generating different outcomes for workers. However, explanations for this variability needs further development. The present article addresses this issue by considering the role played by workplace unions' framing of lean production. It finds that unions' framing is derived from their identities in interaction with available resources in institutional and organisational terms. A case study comparison of the automotive parts industry in Italy and the United States was conducted.
The Effect of Organizational Commitment and Organization Identity Strength to...IOSR Journals
Fire Department Employee Performance Jakarta Indonesia was marked by people had not been
maximized yet since in the fire cases always come late. Society always expected the performance of the fire
department in carrying out their duties on time. The purpose of this research was to measure and describe the
extent to which performance of the Jakarta Fire Department when it was affected by the variable of
organizational commitment and strength of organizational identity and organizational citizenship behaviour.
The method used in this research was quantitative. Data analysis techniques used was SEM (Structural
Equation Modelling) with the help of AMOS program. The data were collected by using a research instrument
that was distributed to the sample of 355 employees. The results showed that organizational commitment was
significantly influence organizational citizenship behaviour, but having no significant effect on employee
performance. While organizational citizenship behaviour had a significant effect on employee performance.
Organizational citizenship behaviour was mediating the relationship between commitments to employee
performance. On the other hand, it did not significantly influence organizational identity on organizational
citizenship behaviour, and also no significant effect on the employee performance. The implication of research
was organizational citizenship behaviour of Fire Department employee to be important in improving employee
performance.
A framework for developing leadership model based on national culture aspectsAlexander Decker
This document proposes a framework to help multinational companies develop culturally appropriate leadership models for their subsidiaries operating in different countries. The framework involves identifying the cultural aspects that impact the workplace in the host country, the leadership practices associated with the host country's culture, and other contextual factors. Companies would use this framework to understand how the host country's culture shapes effective leadership and to develop models that fit each local context. The document recommends using case study and action research methods to implement the framework and build customized leadership models.
Organizational commitment profiles and job satisfaction among Greek private a...Yannis Markovits
This article examines the relationship between organizational commitment profiles and job satisfaction among Greek private and public sector employees. It summarizes previous research showing that organizational commitment consists of multiple components (affective, continuance, normative) that can form distinct profiles. Greece has unique cultural characteristics but has been underrepresented in organizational research. The study explores how commitment profiles relate to intrinsic and extrinsic job satisfaction in Greece, adding to the limited research on profiles outside North America. It also compares profiles and job satisfaction between private and public sector employees, who may differ due to Greece's employment context. The results could help validate the profiles approach across cultures and employment sectors.
The main objective of the current study is to investigate the effects of organizational culture on organizational health. Modern organizations are in a very intense competitive conditions and in order to survive, they need parameters which guarantee their survival. Therefore, the current study will investigate the significance of culture in this regard. Municipalities as one of the organizations providing urban services are in a position where it is possible to lose their impact due to the activities of other organizations. Accordingly, the statistical population selected for this study includes all the employees in Tehran Municipality. In order to gather the required data, after determining the sample size as 384 participants using Krejcie and Morgan table, standard questionnaire of Denison for culture (2000) and organizational health (2008) were used. The current study is a quantitative one carried out as a descriptive survey. The validity and reliability of the study are confirmed using appropriate methods. Finally, in order to test the hypotheses of the study, various descriptive and inferential statistical tests were used. It was found out that the organizational survival of Municipality was affected by various cultural parameters, among which compatibility had the highest impact.
Board of directors is the decision-making organ in the organization that faces complex tasks
pertaining to strategic-issue processing. It comprises of directors from various backgrounds
hence face interaction difficulties that can prevent them from fulfilling their tasks. This study,
will investigate whether the board diversity influences CSR and firm reputation in Kenya. This
will capture the boards’ monitoring and resource provision abilities; and it will be in line with
Agency and resource dependency theories. The general objective to the study is to establish
whether board diversity influences firm’s CSR and corporate reputation in Kenya. There have
been studies on how board diversity on firm performance and CSR but no paper has been
published looking at the corporate reputation and more over concerning gender diversity on
boards in developing countries.The number of women in the board has a significant impact on
corporate social responsibility and corporate reputation. Women bring a number of strengths to
the board including an increased sensitivity to CSR and participative decision-making styles
and these benefits contribute to enhanced corporate responsibility strength ratings.This study
makes a theoretical contribution to the corporate governance literature by analysing board
diversity within the framework of two major theories Agency and Resource. This study also
makes a theoretical contribution to the diversity and governance literature by providing a better
understanding of the relationships between board gender, professional and experience diversity
andfirm’s CSR and reputation.This study will be beneficial to the management of corporations
and top management in decision making especially on the issue of SCR and the firm’s
reputation. It will also lay ground for more studies to be conducted in Kenya and other
developing nations.
International Journal of Business and Management Invention (IJBMI)inventionjournals
International Journal of Business and Management Invention (IJBMI) is an international journal intended for professionals and researchers in all fields of Business and Management. IJBMI publishes research articles and reviews within the whole field Business and Management, new teaching methods, assessment, validation and the impact of new technologies and it will continue to provide information on the latest trends and developments in this ever-expanding subject. The publications of papers are selected through double peer reviewed to ensure originality, relevance, and readability. The articles published in our journal can be accessed online.
The Journal will bring together leading researchers, engineers and scientists in the domain of interest from around the world. Topics of interest for submission include, but are not limited to
Effects of managing gender of employees in enhancing organizational performan...Alexander Decker
This document summarizes a research study on the effects of managing gender diversity to enhance organizational performance at Kenya Ports Authority. The study found that gender, age and marital status impact organization performance and success. It recommends that KPA recruit a more diverse workforce to improve decision making, understand customer needs better, and increase staffing flexibility. Managing diversity well through human resource policies and practices can reinforce these benefits. The background discusses how globalization requires more interaction among diverse people, so organizations must capitalize on diversity. Gender diversity can provide resources like market insight and innovation that lead to competitive advantage and higher performance, according to previous research.
International Journal of Business and Management Invention (IJBMI)inventionjournals
International Journal of Business and Management Invention (IJBMI) is an international journal intended for professionals and researchers in all fields of Business and Management. IJBMI publishes research articles and reviews within the whole field Business and Management, new teaching methods, assessment, validation and the impact of new technologies and it will continue to provide information on the latest trends and developments in this ever-expanding subject. The publications of papers are selected through double peer reviewed to ensure originality, relevance, and readability. The articles published in our journal can be accessed online.
The moderating role of organizational tenure on the relationship between orga...Alexander Decker
This document discusses a study that examined the relationship between organizational culture and organizational citizenship behavior (OCB) in Ghana's banking industry, and whether that relationship is moderated by employee organizational tenure. The study found that organizational culture positively predicts OCB. Additionally, organizational tenure moderates the relationship such that employees with longer tenure are more likely to engage in OCB than those with shorter tenure. The findings are consistent with attraction-selection-attrition and human capital theories. The implications for practice and research are discussed.
- The study examined the effects of coworker trust, transformational leadership, job stress, and employee silence on organizational cynicism during the COVID-19 pandemic.
- The study found that coworker trust and transformational leadership negatively impacted organizational cynicism, while job stress positively impacted organizational cynicism.
- Employee silence was found to strengthen the positive effect of job stress on organizational cynicism.
Management of Cultural Diversity: new master in the Netherlands! More information: www.tilburguniversity.edu/education/masters-programmes/management-of-cultural-diversity
This document provides an overview of the Cross Cultural & Diversity Management course at Fore School of Management. The course aims to enhance knowledge of cross-cultural issues and sensitivity working in culturally diverse situations. Key topics covered include culture and its dimensions, cultural diversity priorities, Hofstede's cultural dimensions model, ethics and social responsibility, and managing across cultures. Evaluation includes assignments, projects, discussions, and assessments. Ground rules are also outlined.
How Workplace DiversityDrives and Challenges PerformanceThe HR Observer
This document discusses how managing workforce diversity can drive business performance but also present challenges. It defines diversity as differences in things like race, culture, gender and abilities that provide a variety of perspectives. True diversity goes beyond just representation and involves treating everyone fairly and maximizing all workers' potential. Simply having a diverse workforce in photos means little without inclusion at all levels of management where diversity can foster innovation. The document provides tips for managing diversity like challenging policies that disadvantage groups and ensuring diversity is part of all management levels. An exercise also prompts listing changes to meet a diverse workforce's needs.
Managing cultural diversity in an effective way can lead to a range of benefits. It allows you to enhance the synergy of a workforce and provide a sustainable competitive advantage in the market place.
The document discusses cultural diversity trends that are impacting the workforce. It notes that racial and ethnic minority populations as well as women and LGBT individuals are growing significantly. It also discusses the aging population and generational differences. To address these changes, the document recommends that companies develop diversity training, understand different cultural perspectives, and establish an inclusive culture that celebrates all types of diversity. Companies should also focus on serving diverse customer segments and implement diversity management principles throughout the organization.
This study examines the relationship between corporate governance and financial performance of pharmaceutical firms in Pakistan. The study uses data from annual reports of 20 multinational and 90 national pharmaceutical firms from 2003-2013. Regression analysis is used to analyze the impact of various corporate governance mechanisms (board composition, board size, board education, board experience) and CEO duality on financial performance measured by return on assets and return on sales. The results indicate that board composition, size, education and experience are positively associated with financial performance, while CEO duality is negatively associated with performance. Thus, better corporate governance through greater board independence and separation of CEO/chairperson roles can enhance pharmaceutical firm performance in Pakistan.
This document summarizes a study that examines the relationship between board diversity and earnings quality of firms listed on the Amman Stock Exchange from 2010 to 2019. The study measures board diversity based on gender, experience, age, and religion of board members. It finds that gender, experience, and age of board members significantly affect earnings quality, but religion does not. This suggests that more diverse boards in terms of these characteristics can enhance earnings quality. The study provides implications for Jordanian policymakers to promote more diverse boards to improve corporate governance of listed firms.
Board size, composition and the performance of private sector banks 2IAEME Publication
This document analyzes the relationship between board size, composition, and performance of private sector banks in India. It first provides background on corporate governance in Indian banks and reviews prior literature on the relationship between board structure and firm performance. The document then outlines the objectives, methodology, and variables of the study. Specifically, the study examines the relationship between board size and composition, meetings, and various performance metrics including return on assets, net profit margin, and interest spread for 8 major private sector banks over a 10-year period. The results of the analysis found a significant relationship between board composition and certain performance indicators in private banks, suggesting board composition impacts bank performance. The private banks were also found to utilize their asset and equity bases more efficiently
1. Corporate Governance-Assessment of the Determinants of the Effectiveness o...cpamutui
The document discusses factors that determine the effectiveness of corporate boards of directors. It reviews theories of board effectiveness, including agency theory, stewardship theory, and stakeholder theory. Structural factors like board size and composition, as well as non-structural factors like decision-making processes, board cohesiveness, and cognitive conflict are examined. The literature finds that decision-making quality and board cohesiveness positively influence board effectiveness in fulfilling its roles of control, service, and strategy. However, accurately assessing individual director characteristics and board processes remains challenging.
This document summarizes a research paper that examines how women directors contribute to organizational innovation in firms. It analyzes the relationships between women directors, board decision-making culture, and organizational innovation. Specifically, it tests whether two aspects of decision-making culture - cognitive conflict and preparation/involvement during board meetings - mediate the positive relationship between women directors and organizational innovation. The study uses survey data from 341 Norwegian firms and finds that women directors contribute positively to innovation, and this relationship is partially mediated by cognitive conflict and preparation/involvement during board meetings. It concludes that enabling women directors' active participation in boardroom discussions can help maximize the benefits of gender diversity for innovation.
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D0342032041
1. International Journal of Business and Management Invention
ISSN (Online): 2319 – 8028, ISSN (Print): 2319 – 801X
www.ijbmi.org Volume 3 Issue 4ǁ April. 2014ǁ PP.32-41
www.ijbmi.org 32 | Page
The Effect Of Board Diversity Towards The Company Value Of
Financial Institutions In Indonesia
1,
Helena Vania , 2,
Supatmi
1
(Faculty of Economics and Business, Satya Wacana Christian University, Indonesia)
ABSTRACT: Board diversity is one issue related to corporate governance, so the objective of this research is
to examine the effect of board diversity towards the company value of financial institutions in Indonesia. Board
diversity was measured by five variables, i.e. women in board, competence in economics and bussiness, age,
outsite directors, and nationality. Company value was measured by Tobin’s Q ratio. Research samples
consisted of 57 financial institutions listed in Indonesian Stock Exchange period 2011. This research used Mann
Whitney test. The result found that the more the outsider directors in board (especially the board of
commissioner) and bussiness competence of board of commissioner in the company, the higher the company
value. On the other side, when the companies have more young directors and women directors, the company
value will be lower.
KEYWORDS : Corporate governance, Board diversity, Company value, Tobin’s Q.
I. INTRODUCTION
Current developments prove that management’s duty is not only to make sure that the management
processes run efficiently, but it need a new instrument to ensure that the management has performed well as
Good Corporate Gorvenance (GCG) (Kaihatu, 2006). Unfortunately, according to the Chairman of the National
Committee on Governance (NCG) in June 2012, the implementation of GCG Indonesia when compared to
ASEAN countries was remained at 10th position, while the last position was occupied by Philippines as the 11th
position (http://www.neraca.co.id). Yet the existing researches suggest that good practice of corporate
governance may lead to the increased company value then it will give a positive signal to the investors, as well
as companies with high market value (for any reasons) tend to implement better corporate governance (Black et
al. 2002). The existence of good corporate governance also makes investors feel a sense of safety in investing
because investors believe that management can manage and run the company well, while the application of
corporate governance can be reflected in the company value of the company shares price (Kusumastuti et al.
2007).The existence of company organs (the board of commissioners and directors) is an evidence of the
application of good corporate governance principles (Surya and Yustiavandana, 2006). In Indonesia, the adopted
type of board structure is a two-tier board structure, this board structure type is also adopted in countries such as
Germany, the Netherlands and Japan (Weimerand Pape, 1999). Existing regulations require companies to have
two board structures in the company those are board of commissioners and board of directors. Members of the
board of commissioners and the board of directors are elected by the shareholders in a shareholders general
meeting. Commissioners, led by a chairman, have to perform the monitoring function towards the management.
Unlike the commissioners, board of directors is led by a president who serves as executive director at the
company who will be responsible to the shareholders and the board of commissioners (Darmadi, 2011).
The existence of board members distribution (board diversity) is believed to affect the company value,
both in the short term and long term (Cox and Blake, 1991, Robinson and Dechant, 1997, in Carter et al. 2003).
The board distribution (board diversity) is allegedly have positive impact. The greater the board members
diversity can lead to more conflict, but the diversity can provide an alternative solution to more diverse problem
than the homogenous board members. In addition, the diversity of board of directors provides unique
characteristics for companies that can create extra value.Carter et al. (2003), Carter et al. (2007), Kusumastuti et
al. (2007), Darmadi (2011), Atahau and Supatmi (2011) examined the impact of board diversity towards the
company value. Carter et al. (2003) and Carter et al. (2007) found that board diversity had a positive impact
towards the company value. The study results by Kusumastuti et al. (2007), Atahau and Supatmi (2011), showed
the simultaneous effect of board diversity on company value. Partially Kusumastuti et al. (2007) found that the
variable of Chinese ethnic presence in the board had negative impact to the company performance while the
presence of women in board of directors, educational background, age and proportion of outsider directors had
no effect towards the company value. Darmadi (2011) found results that the presence of women directors had
negative effect on the company financial performance, then the nationality diversity did not affect
2. The Effect Of Board Diversity Towards The…
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company financial performance and the presence of young directors (aged less than 50 years) had
positive impact towards company financial performance. Atahau and Supatmi (2011), partially also found the
results that the presence of women and economic educational background of the board of directors on the
pension fund actually had negative impact towards company financial performance, while the presence of
duality had positive impact on company financial performance.Based on the inconsistencies of the previous
study results, this study will examine differences of the company value based on in the board members diversity
of the women variable, the proportion of board members who are competent in the economics and business
fields, council members aged less than 50 years, the proportion of outsider directors and foreign people in the
board. If any differences are found, it means that the member diversity of the board have an impact towards the
company value. The samples used in this study were the financial institution listed on the Stock Exchange in
2011. Strict regulation in determining the board of commissioners and directors in financial institutions are
expected to produce research results that differ from previous studies.This study will be able to see the diversity
practices of the board members in financial institutions, and also provide additional information related to the
board members diversity in financial institutions. On the other hand, for companies that were included in
financial institutions, this study may become an input in the determination of commissioners and directors.
II. LITERATURE REVIEW AND HYPOTHESIS FORMULATION
According to Milliken and Martins (1996) in Kang et al. (2007), board diversity can be defined as the
variation in the composition of the board. There are two categories of diversity, the diversity that can be
observed directly and diversity that cannot be observed directly. The diversity that can be observed directly
include age, ethnicity and sex (gender). Meanwhile, the diversity that cannot be observed directly includes
educational background, work experience and membership in an organization.The existence of distribution and
diversity in the board members are believed to affect the company value, both in the short and long term (Cox
and Blake, 1991, Robinson and Dechant, 1997, in Carter et al. 2003). According to Carter et al. (2007), the
diversity of the board of directors had a variety of unique characteristics that can make your business become
more profitable and provide more value for the shareholders. Robinson and Dechant (1997) in Carter et al.
(2003) also provided some propositions and empirical evidence related to the diversity in the board. First, the
diversity of the broad provided a better understanding of the marketplace, where it was associated with various
company supplier and customer demographics. Second, the diversity could improve creativity and innovation.
Third, the diversity created effective alternative solutions. Heterogeneity in the board can lead to more conflict,
but there will be more alternative solutions to such problems and can establish accuracy in assessing the possible
consequences of the alternatives taken. The fourth, the diversity can increase the effectiveness of the company
leadership. This is related to the viewpoint of the board members, where homogeneous members will lead to
narrow perspective of something when compared with diverse board members. The fifth, diversity can lead to
more effective global relationships.
According to Hermalin and Weisbach (2000), agency theory cannot simply provide a clear prediction
about the correlation between board diversity and the company value. This poses a dilemma, the existing
theories cannot provide a clear prediction on board diversity regulation within the company value, but on the
other hand there is a belief that the correlation between the two is positive correlation. This research examine
differences of the company value based on in the board members diversity of the women variable, competence
in the economics and business fields, age, outsider directors and nationality, here is the hypothesis formulation:
2.1 Woman
According to a study reported by Catalyst in September 2010, it was shown that there was still a gap
between men and women at CEO level across the world. Equality of women and men in top-level corporate
executives in the 500 Fortune list (the list of 500 companies reported by Fortune magazine) predicted that it
would have a balanced proportion in 2064 (http://www.seputar-indonesia.com). The small number of women
who are placed in the peak position may be caused by the existence of different views about the causes of the
success achieved by men and women. The success of the man considered to be due to high ability (in terms of
talent or intelligence), while women are considered successful due to luck (Deaux and Ernswiller in Crawford,
2006).Women have a very high prudence, tend to avoid risk and more thoroughly than men. This side makes a
woman will not in a hurry to take a decision (Kusumastuti et al., 2007). Cautious attitude and meticulous in
women board members will affect any decision to be taken. With the caution a women has, it will minimize the
risk of failures and mistakes in any decision for the company, so it can affect the company performance. On the
other hand, with the growing gender diversity in the board members, then it will allow the emergence of conflict
(Richard et al, 2004), which can lead to slow decision-making process (Goodstein et al, 1994).Carter et al.
(2003) and Carter et al. (2007) found a positive effect of the proportion of women board members towards
company value.
3. The Effect Of Board Diversity Towards The…
www.ijbmi.org 34 | Page
Kusumastuti et.al (2007) stated that there was no influence of the presence of women directors on
company value. Darmadi (2011) found a negative correlation between the proportions of women with market
performance. Meanwhile, Atahau and Supatmi (2011) found a negative effect of the presence of female
directors on the company financial performance. Therefore, the research hypothesis can be formulated as
follow:H1: There is a company value difference between the company with female board members and those
which do not have.
2.2 Competence in the Economics and Business Fields
Simons and Pelled (1999) in Mahadeo (2011) stated that various knowledge in work dimension was an
important thing because the board of directors would face important decisions in such business decisions in
finance, human resources, legal, taxation, ethics, environment and operations. While Kusumastuti et al. (2007)
argued that it was not a coumpulsion for someone who would come to the business world to have business
education, but it would be better if the board members have a background of business and economics education.
In contrast to previous studies, if the board diversity was observed based on educational background in
economics and business, this study used the competence of board members in the economics and business
fields. Competencies owned by the board members were viewed based on experience and knowledge in
economics and business.With the experience and knowledge in economics and business fields, at least the board
members have the ability and competence to better manage the business and make business decisions rather than
no experience and knowledge in of economics and business fields. Therefore, with greater proportion of board
members who are competent then it may be possible that most of the decisions to be taken for the company are
also based on the consideration of the people with competence. The company with the greater proportion of
competent board members in economics and business fields is alleged to have higher company value compared
to the company with less proportion of competent board members.In pension fund, Atahau and Supatmi (2011)
found that economic and business educational background influences financial performance of the company's.
While Kusumastuti et al. (2007) found that educational background had no effect on company value. Based on
the findings above, a hypothesis can be formulated as follow:
H2: There is a company value difference between the company with the proportion of competent board members
in the economics and business fields over the average value of samples and below the average value of
samples
2.3 Age
Age can be considered as a proxy to see the level of experience and one's risk taking way (Herrmann and
Datta, 2005). Houle (1990) in Kang et al. (2007) stated that the board of directors with the older age group had
more experience, maturity and usually also have economic resources. Middle age groups had a major role and
were actively responsible in the company and the community, while the younger age groups had the energy and
courage to succeed and had plans for the future. Levinson and Peskin (1981) in Santrock (1995) stated that the
34-50 years old age group was the most healthy, the most calm, can control themselves, and most responsible.
Barker and Mueller (2002) found that older managers tend to be less like risk (risk averse), while younger
managers tend to have a higher ability to process new ideas (Cheng et al. 2010). Less like risk attitude,
experience and more wisdom held by board members in the older age group can give the effect on company
value. Someone with more experience and wisdom tend to be more cautious in making any decisions because
they can learn from past experience. In addition, the presence of board members from younger age groups may
also affect the company value. The courage to succeed that is supported by their abilities, make them try to do
their job as good as possible so as to increase the company value. But on the other hand, young board member
who generally does not have enough experience and wisdom, can degrade the company performance by their
risk taker nature.Previous research conducted by Darmadi (2011) showed that the existence of positive
correlation between board members under the age of 50 years with the market performance. On the other hand
Cheng et al. (2010), Kusumastuti et al (2007) argued that age had no effect on company value. From the
discussion above, it is shown that age can affect a person's actions within the company which will then affect the
company value. Based on that, hypothesis can be formulated as follow:
H3: There is a company value difference between the company with proportion of board members who are aged
less than 50 years over the average value of samples and below the average value of samples
2.4 Outsider Directors
The proportion of outsider directors is the ratio of independent directors (outsider director) with the
total number of board of directors (Kohlbeck and Mayhew, 2004, Belkir 2008, Chien and Hsu, 2010).
According to national committee task force, the proportion of independent directors in corporate gorvenance
policy is set at least 30% of the total number of directors or at least 1 (one) person. The independence required
by the Capital Market Supervisory Agency (Bapepam regulation number IX.15) for the commissioner post that
4. The Effect Of Board Diversity Towards The…
www.ijbmi.org 35 | Page
(1) originate from outside or issuer or public company, (2) do not have share either directly or indirectly to the
issuer or public company, (3) has no affiliation with the issuer or public company, (4) do not have a business
relationship, either directly or indirectly related to the business activities of the issuer or public company. While
the independence required by Bank Indonesia for commercial bank (Bank Indonesia Circular Letter Number
9/12/DPNP) for the president post is do not have (1) financial relationship, (2) management relationship, and (3)
ownership relationship With independent party in the board, then any decision to be taken will be more
objective because the decision is taken based on the interests of the company. If there are no independent
directors on the board of directors composition, then there will be no possibility of the objectivity of decisions
taken and thus the board of directors independence can be no doubt. In addition, the existence of independent
party can also give more confidence on the results of the financial reports because it is considered more
objective so that the financial reports produced will be more qualified and far from the possibility of fraud than
no independent party. With greater the outsider proportion in the board members, the company is expected to
generate better value than smaller outsider proportion.
Beasley (1996) found that the presence of independent directors is correlated with less possibility of
fraud cases in financial reports. Hermalin and Weisbach (2000) found that the impact of independent directors
(outside directors) was quite strong and significant towards company performance. The presence of independent
directors was also considered to contribute positively to the supervision functions and good company
performance (Kang et al, 2007). From these explanations, a hypothesis can be formulated as follow:
H4: There is a difference in the company values between company with outsider proportion over the average
value of samples and below the average value of samples
2.5 Nationality Diversity
Nationality and cultural diversity of the management team members can increase the cross-cultural
communication issues (Lehman and Dufrene 2008 in Darmadi, 2011) and the existence of personal conflict
(Cox, 1991). On the other hand, the presence of foreign people in the board structure is expected to bring
competitive advantage for the company, those are the existence of international network, more commitment to
the rights of shareholders, and the avoidance of certain groupings in management (managerial entrenchment)
(Oxelheim and Randøy, 2003).The presence of business globalization increasing, foreign investors have the
opportunity to buy more shares in the company (Oxelheim and Randøy, 2003). According to Darmadi (2011),
companies with foreign ownership are more likely to have a more heterogeneous board in terms of nationality.
With the presence of foreign people in the board composition, can also add network or business relationships
globally. Besides the presence of foreign peopele in the board composition can provide a better understanding of
the marketplace, where it is associated with various supplier and customer demographics (Robinson and
Dechant 1997 in Carter et al., 2003). Of those opinions, greater proportion of foreign people is suspected to give
a better company value. However, previous research carried out by Darmadi (2011) in Indonesia found that
nationality diversity had no effect on company performance. Then a hypothesis can be formulated as follow:
H5: There is a company value difference between the companies with foreign nationality board members than
those which don’t have
III. RESEARCH METHODS
The population of this study was the financial institutions listed in the Indonesia Stock Exchange (IDX)
in 2011, while the samples were taken by purposive sampling method with the following criteria:
[1] Financial institutions listed on the Indonesia Stock Exchange (IDX) in 2011.
[2] Financial institutions that published annual reports in 2011.
[3] Financial institutions that had the necessary data for this study.
The data used here were secondary data derived from the annual report and financial statements in 2011
of each company that were obtained from the Indonesia Stock Exchange website (www.idx.co.id) and the
website of the company concerned. The variables used in this study were as follow:
a. WOMEN, measured by classifying into two, 0 indicated no female board member and 1 if there was any
female board member
b. COMPETENCE, measured by classifying into two, 0 indicated the proportion the proportion of competent
board members below the average value of sampels and1 indicated the proportion of competent board
members over the average value of samples. Competence was measured from the knowledge and
experience of the board members in the economics and business fields.
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c. AGE, measured by classifying into two, where 0 indicated the proportion of board members who were
younger than 50 years old below the average value of sampels and 1 indicated the proportion of board
members who were younger than 50 years old over the average value of samples.
d. Outsider directors (OUTSIDER), measured by classifying into two, 0 indicated the proportion of outsider
board members below the average value of sampels and 1 indicated the proportion of outsider board
members over the average value of sampels.
e. Nationality diversity (NATION), measured by classifying into two, 0 indicated no foreign nationals in
board members and 1 if there were foreign nationals in board members.
f. Company value (TOBIN), measured by Tobin 's Q ratio, the following Tobin 's Q ratio formula
(Widiastuti and Usmara, 2005):
Description:
Q : Company value
EMV : The equity market value (year-end closing price x number of circulated shares at the end of
year)
D : The book value of total debt
EBV : The book value of total equity
In this study, techniques and stages of data analysis used descriptive statistics to determine the average
value, minimum, maximum and standard deviation of the variables. Before performing the hypothesis test, the
normality test had been performed, normality test used Kolmogorov - Smirnov test. Normality occurs when the
result of Kolmogrov-Smirnov test is more than 0.05. Hypothesis test is performed by using the Mann Whitney
test if the data distribution is not normal. If the distribution of data is normal, then the test will use different test
t-test Pooled or Separate Variance, with statistical hypothesis as follow:
Ho : μi ≤ μni Ha : μi > μni
IV. RESULTS AND DISCUSSION
4.1 Research Sample Description
Based on predetermined sample criteria, we obtained samples of 57 companies as outlined in the table
below.
Tabel 1. Research Samples
The Criteria Used Number of Companies
1. Financial institutions listed on the Stock Exchange in 2011 72
2. Companies that did not publish an annual report in 2011 ( 1 )
3. Companies that did not have the required data for this study ( 14 )
The number of samples used 57
From the table above it can be seen that from 72 financial institutions listed on Indonesia Stock
Exchange, a company did not publish an annual report and the remaining 14 companies did not have the
required data, i.e. data related to the board members age.
4.2 Descriptive Statistics
A general description of research data on each variable used in this study can be seen in table 2. Table 2
is the result of Tobin's Q ratio descriptive statistics and a descriptive statistic results based on data from the
board of commissioners (BOC), the board of directors (BOD) and total existing board members (BOARD).
Table 2. Summary of Descriptive Statistics
Research Variable Min Max Mean Std. Dev.
Tobin’s Q 0.29 3.50 1.0202 4.4070
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Research Variable
BOC BOD BOARD
Number % Number % Number %
Women
Yes (1) 25 43.9% 23 40.4% 27 47.4%
No (0) 32 56.1% 34 59.6% 30 52.6%
Competence
Over the average (1) 31 54.4% 32 56.1% 32 56.1%
Below the average (0) 26 45.6% 25 43.9% 25 43.9%
Age (<50 years old)
Over the average (1) 24 42.1% 24 42.1% 27 47.4%
Below the average (0) 33 57.9% 33 57.9% 30 52.6%
Outsider
Over the average (1) 34 59.6% 45 78.9% 34 59.6%
Below the average (0) 23 40.4% 12 21.1% 23 40.4%
Nation
Yes (1) 12 21.1% 10 17.5% 13 22.8%
No (0) 45 78.9% 47 82.5% 44 77.2%
Total 57 100% 57 100% 57 100%
Source: Processed data, 2013
Based on the data presented in Table 2, it can be seen that the average value of Tobin 's Q of 1.0202
indicated that the average sample company had a Tobin 's Q value more than one. Of the 57 sample companies,
there were 22 companies that had Tobin's Q value lower than one and 35 companies had Tobin's Q value higher
than one. When the Tobin's Q value is higher than the one it indicates that the company value is valued higher
by the market, while the Tobin's Q value lower than one indicates that the company will be the target of
attractive acquisition both to be combined with other companies or for liquidation (Widjaja et al., 2011).Table 2
also shows that from overall (BOARD) 27 companies had female board members. Furthermore, 25 companies
had female members in the board of commissioners (BOC) and as many as 23 companies had female members
in the board of directors (BOD). This suggests that more female members who sits on the board of
commissioners than in the board of directors. There is possibility that woman has a very high attitude of
prudence, tend to avoid risk and more thoroughly than men, and it would be helpful for better process control.
On the other hand, the nature of prudence to avoid risk (risk averse) can make a company lose the opportunity to
get high returns, high risk high return, so it can affect the company performance.
For BOARD competence variable, a 57 sample companies, there were 32 companies or 56.1% had
proportion of board members over the average value of samples (0.82). For BOC competence variables, as many
as 31 companies had proportion of board members over the average value of samples (0.78) and for BOD as
many as 32 companies had commissioners proportion over the average value of samples (0.86). Those results
indicated that in terms of competence, most companies have proportion over the average value of samples. That
is, the majority of board members at financial institutions already had competence in economics and business
fields. This is possible because in financial institutions, the competencies board members are considered
important. Indonesian Bank Regulation Number 14/9 / PBI/2012 about Fit and Proper Test also regulates the
competency requirements of the board members related to knowledge and experience in financial management.
For board members aged less than 50 years, in general (BOARD) there were 47.4 % of sample companies had
proportion of board members less than 50 years over than the average value of samples (0.39). At BOC 24
companies had proportion of board members less than 50 years over than the average value of samples (0.25). In
BOD there were 24 companies that had proportion of board members less than 50 years over than the average
value of samples (0.53). The average value of gretarer proportion was found on board, when regarded as an
executive in the company, the presence of board members younger than 50 years tend to have energy and
courage to succeed and plan for the future (Houle, 1990 in Kang et al.2007) and it can make a positive
contribution to the company.
At outsider BOARD variable it can be seen that 34 companies had proportion of board members over
than the average value of samples (0.69). As for the BOC and BOD, as many as 34 companies had independent
commissioners proportion over than the average value of samples (0.47) and as many as 45 companies had
proportion of independent board over than the average value of samples (0.90).
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Regulation of Indonesian Bank number 8/4/PBI/2006 on the implementation of good corporate
governance for banks stated that at least 50% of board members are independent directors. Furthermore, the
average value for the independent directors proportion of 47 % indicated that there was still a company with
proportion of independent directors less than 50 % and it is not in line with the rules established by Indonesian
Bank.Based on the presence of foreign nationals in the board members, whole (BOARD) of 57 sample
companies there were only 13 companies with foreign national board members. In BOC there were only 12
companies with foreign nationals and in BOD, there were 10 companies. Darmadi (2011) argued that companies
with foreign ownership are more likely to have a board that is more heterogeneous in terms of nationality. Less
company with no foreign nationals in board members could also be caused by the majority of the sample
companies in a financial institution were national companies that does not have a large amount of foreign
ownership, so the heterogeneity in terms of nationality was still rare.
4.3 Normality test
Here are the results of normality test using Kolmogorov - Smirnov Test against the variables in the
research.
Table 3. Normality test
Kolmogorov-Smirnova
Shapiro-Wilk
Statistic df Sig. Statistic df Sig.
Tobin’s Q 0.215 57 0.000 0.623 57 0.000
a. Lilliefors Significance Correction
Source: Processed data, 2013
From the normality test results it is shown that Sig. KS value for Tobin's Q variable is 0.000 which was
far below the value of α = 0.005 it proved that the Tobin's Q variable was not normal. Thus, Mann Whitney test
is used for the hypothesis test in this research.
4.4 Hypothesis Test
Hypothesis test in this research used Mann Whitney test and the hypothesis test results can be seen in
Table 4.
Table 4. Summary of Hypothesis Test Results
Research Variable Tobin’s Q
BOC BOD BOARD
Women -0.780 -0.862 -1.847*
Competence -1.419*
-0.877 -0.635
Age -0.598 -1.447*
-1.039
Outsider -1.424*
-0.059 -1.888*
Nation -0.685 -0.178 -0.675
*
Significant at the 0.10 level
Source: Processed data, 2013
Based on the Mann Whitney test results above, it was found that companies with outsider proportion
over the average value in the samples in BOARD and BOC, will have different company value with the
company with the outsider proportion below the average value of samples. It is also shown that the average
company value for companies with outsider proportion over the average value of samples is higher (1.079)
compared with the average company value for companies with outsider proportion below the average value of
samples (0.934). This means that the more outsider directors, the higher the company value. Based on the
monitoring function performed by the board of commissioners, it may be indicated that the presence of higher
independent board proportion will make better company value. The more the independent board proportion, the
more objective the monitoring performed because every monitoring aspect was carried out by company
interests. Hermalin and Weisbach (2000) found that the effect of independent board members was quite strong
and significant towards performance. The presence of independent board members also considered to contribute
positively to the monitoring functions and good company performance (Kang et al, 2007).Based on tests
performed on the financial institutions, it was found that separately, from the BOC and BOD did not show any
difference in the company value as seen from the presence of female board members. However, the results could
also indicate that the proportion of women in the board of commissioners and directors (BOARD), could make a
difference on the company value.
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The average company value for companies with female board member was lower (0.976) compared
with the average value of companies with no female board members (1.116). Thus there was negative
correlation between the presence of female board members with the company value. This is in line with
Darmadi (2011) and Atahau and Supatmi (2011) who found negative impact of the presence of female directors
on the company's financial performance. Cautious and meticulous attitude in women board members will affect
that any decision to be taken tend to be risk averse, so that it can make a company lose the opportunity to get
high returns, high risk high return, so it can affect the company performance.For the competence variable in the
board of commissioners (BOC), it was found company value difference between companies with larger
competent commissioners’ proportion in economics and business over the average value of samples and below
the average value. The results also showed that the average company value for the company with the proportion
of competent board of commissioners in economics and business over the average of samples was higher
(1.088) than the average company value below the average of samples (0,939). This means that the more board
of commissioner members who were competent in the economics and business fields, the higher the company
value. It indicates that competence in economics and business fields is important to be owned by a board
member. Indonesian Bank Regulation Number 8/4/PBI/2006 on the implementation of good corporate
governance explained that not only as a supervisor, the task of the commissioners is to advise, direct, monitor
and evaluate the performance of the board of directors. Given these duties, the commissioners are required to
have better competence in the execution of their duties, so the commissioner may provide advice and
appropriate referrals and can evaluate which later can bring the company to a better direction and increase the
company value.
Furthermore it can be seen that for the board of directors (BOD), the companies with the proportion of
board members aged less than 50 years over the average value of samples had different company value with
those below the average value of samples. However, the average company value with proportion of board
members aged less than 50 years above the average samples were found to be low (0.939) compared to the other
groups (1.079). Thus there was negative correlation between the age of board of directors and company value. It
does not in line with the opinion of Hambrick and Mason (1984) which argued that younger managers were
more likely to take risky strategy, and the company with young managers will experience higher growth than
their counterparts with older managers. But on the other hand, generally, young board members do not have
enough experience and wisdom, can degrade the company performance with the risk taker nature. From
implementation functions performed by the board of directors, board members aged less than 50 years will be
more willing to make decisions, sometimes without regard to the status quo and stability of their career (Cheng
et al., 2010), so without enough experience it can lead to unwise decisions that will ultimately affect the
company value.In financial institutions, the value of the companies which have foreign board members and the
companies which do not have them were not found different. This is possible because the proportion of their
existence was not large, so that their presence in the board members did not have a significant impact on
decision making. The absence of difference in the company value by foreigners in the board members
distribution may also due to the majority of the sample companies in financial institutions were national
companies that did not have a large amount of foreign ownership, so the heterogeneity was still rare in terms of
nationality. On the other hand these results also supports the theory that agency theory is simply can not provide
a clear prediction about the correlation between board diversity and company value (Hermalin and Weisbach,
2000).
V. CONCLUSION AND RECOMMENDATIONS
Based on the research results and analysis described before, it can be concluded that the presence of
female board members and the proportion of outsider directors on the board of commissioners and directors,
will affect the company value. The more the female board members, the lower the company value, otherwise the
higher proportion of outsider directors, particularly in the board of commissioners, the higher the company
value. The results also found that the more competent commissioners in economics and business, the higher will
be the company value. On the other hand, the more board of directors members who are less than 50 years, the
lower the company value. In financial institutions, foreign national variables in board members were proved to
have no effect on company value.The research results obtained were in line with researches by Hermalin and
Weisbach (2000) which found that the effect of independent directors (outside directors) were quite strong and
significant towards the company performance. However, the study results did not support the previous research
results by Darmadi (2011) which stated that there was positive correlation between board members who were
younger than 50 years with the performance of the market, and Carter et al. 2003, which suggested a positive
impact between the proportion of women with the presence of the company value. On the other hand, this study
was not in line with Kusumastuti et.al (2007) which stated that economic and educational background of the
business as well as the proportion of outsider directors were proved to have no effect towards company value.
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The research results are expected to provide benefits for companies, especially companies that are
included in the financial institutions, in the determination of the commissioners and directors. Based on these
results, the financial institution is advisable to increase the proportion of independent directors, increase the
competence of board members in economics and business fields, to increase the company value. On the other
hand, it is also advisable to consider the presence of female director and young board member (less than 50
years) in line with the directors, as the research found that the variable had negative effect on the company
value. Then it's good for regulators to improve monitoring against financial institutions. It is based on the
findings which indicated that especially in banks there were independent directors whose values were less than
the minimum standards that have been set by the Bank, as much as 50 % of the existing commissioners.This
study has limitations, those are (a) Analysis of the female and foreign nationality variables which were only
dummy measured. The proportion of shares ownership and women competence might be other factors that
affected the value of women in the company, (b) in outsider board of directors variable, independence was only
measured by whether the name of a board member was stated in the company's share ownership or not.
Limitations are also derived from the absence of full information of shareholders under 5 %, so it could not be
further identified on the ownership of shares under 5% by the board of director.Future research is expected to
not only assess the company in terms of market alone (company value was measured by Tobin's Q ratio), but
can also judge a company based on other financial ratios. In addition to the women variables, it can be added
measuring based on share ownership and women competence. If women calculated in terms of number, the
proportion of women is not great. But if the small proportion of women has a significant share ownership in the
decision-making then it can be expected to produce different study results. Furthermore, future researchers can
add other variables such as the existence of a family relationship, the annual meeting and the presence of
minorities so that the research will be expected to obtain better results.
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